Court Rules For Israel In Dispute With Recon

September 04, 1986|By James O`Shea, Chicago Tribune.

NEW YORK — A federal judge Wednesday ruled for Israel in a contract dispute with Recon Optical Inc., of Barrington, Ill. But U.S. District Court Judge Thomas P. Griesa deflected to other authorities questions raised by documents in the case that outline an Israeli plot to steal highly sensitive military technology from Recon`s plant.

Griesa`s ruling on the contract dispute paves the way for Israel to collect about $20 million from Recon under a letter of credit--a financial instrument used to guarantee that Recon would complete a $43 million secret revolutionary aerial reconnaissance system for the Israeli military.

When a dispute over the contract erupted between Recon and Israel last year, Recon quit working on the project, which is considered vital to Israel`s security. Israel then notified the firm that it would seek the $20 million and Recon asked the court to prohibit such an action.

The judge`s ruling against Recon Wednesday will have little immediate impact on the firm, the world`s leading designer of aerial reconnaissance systems. Company officials quickly announced that Recon would appeal the ruling and lawyers for Israel agreed that the country would not attempt to collect any of the money until a court appeal is exhausted.

But the hearing did little to clear up the questions raised by some documents written in Hebrew that Recon seized from three Isreali military officers who were leaving the plant last May 27.

Recon officials said in court papers that the documents expose a carefully orchestrated Israeli plot to steal the sensitive technology needed to build Recon`s aerial reconnaissance system. The system ordered by Israel would have allowed jets flying within its borders to take minutely detailed pictures of objects more than 100 miles outside its borders. Because of its sophistication, the technology for the system cannot be exported outside the U.S. without a government license.

The existence of the documents prompted a federal investigation by the U.S. Customs Service, which has jurisdiction over export control laws, and the Federal Bureau of Investigation.

But it was clear in the hearings that Judge Griesa thought the legal issues raised by the documents were far beyond his jurisdiction.

After a seven-hour hearing, Griesa said he would make a decision only on the narrow legal issue of Israel`s right to demand $20 million because Recon had quit working on the project.

The issues about the documents ``may have sex appeal and may be good for the press,`` he said, but they involve allegations of misconduct and legal remedies beyond his jurisdiction in the case.

He told Recon officials that such issues would have to be raised elsewhere in another court or in a contract arbitration proceeding now underway.